50% Cuts in Payments to Medi-Cal Doctors Threaten Access to Care

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Just as millions of people are gaining insurance through Medicaid, the program is poised to make deep cuts in payments to many doctors, prompting some physicians and consumer advocates to warn that the reductions could make it more difficult for Medicaid patients to obtain care.

The Affordable Care Act provided a big increase in Medicaid payments for primary care in 2013 and 2014. But the increase expires on Thursday – just weeks after the Obama administration told the Supreme Court that doctors and other providers had no legal right to challenge the adequacy of payments they received from Medicaid.

The impact will vary by state, but a study by the Urban Institute, a nonpartisan research organization, estimates that doctors who have been receiving the enhanced payments will see their fees for primary care cut by 43 percent, on average.

Stephen Zuckerman, a health economist at the Urban Institute and co-author of the report, said Medicaid payments for primary care services could drop by 50 percent or more in California, Florida, New York and Pennsylvania, among other states.

In his budget request in March, President Obama proposed a one-year extension of the higher Medicaid payments. Several Democratic members of Congress backed the idea, but the proposals languished, and such legislation would appear to face long odds in the new Congress, with Republicans controlling both houses.

Dr. David A. Fleming, the president of the American College of Physicians, which represents specialists in internal medicine, said some patients would have less access to care after the cuts. It would make no sense to reduce Medicaid payments “at a time when the population enrolled in Medicaid is surging,” he said.

Dr. George J. Petruncio, a family physician in Turnersville, N.J., described the cuts as a “bait and switch” move. “The government attempted to entice physicians into Medicaid with higher rates, then lowers reimbursement once the doctors are involved,” he said.

But Nicole Brossoie, a spokeswoman for the New Jersey Department of Human Services, which runs the state’s Medicaid program, said the increase was not meant to be permanent. “The enhanced rates will not be extended in New Jersey,” Ms. Brossoie said. “It was always understood to be temporary.”

The White House says Medicaid is contributing to the “largest coverage gains in four decades,” with 9.7 million people added to the Medicaid rolls since October 2013, bringing the total to 68.5 million. More than one-fifth of Americans are now covered by Medicaid.

But federal officials have not set forth a strategy to expand access to care with enrollment, and in many states Medicaid payment rates for primary care services, like routine office visits and the management of chronic illnesses, will plunge back to 2012 levels, widely seen as inadequate.

For the last two years, the federal government has required state Medicaid agencies to pay at least as much as Medicare pays for primary care services. Family doctors, internists and pediatricians have thus received Medicare-level payments for primary care, with the federal government making up the difference in costs.

The impending cuts are larger in states like California that have the widest gaps between Medicaid and Medicare rates.

A survey by the Ohio State Medical Association found that some Ohio doctors began accepting Medicaid patients because of the rate increase in 2013. Ohio doctors who were already participating in the program said they had accepted more Medicaid patients after the rate increase. And almost 40 percent of Ohio doctors indicated that they planned to accept fewer Medicaid patients when the extra payments lapsed.

Under federal law, Medicaid rates must be “sufficient to enlist enough providers” so that beneficiaries have at least as much access to care as the general population in their geographic area. In practice, doctors say, this standard is murky.

The Obama administration told the Supreme Court last month that health care providers had no legal right to enforce the “equal access” requirement in court. This section of the Medicaid law provides guidance to federal and state officials in setting Medicaid rates, but does not allow health care providers to sue state officials to enforce it, said Donald B. Verrilli Jr., the solicitor general of the United States.

The case, Armstrong v. Exceptional Child Center, was filed against Richard Armstrong, director of the Idaho Department of Health and Welfare, by five providers of residential habilitation services to children with disabilities. They argued that Idaho’s payment rates fell below federal standards, and they sued to enforce federal law, invoking the supremacy clause of the Constitution, which makes federal law “the supreme law of the land.”

The court sidestepped the issue in a similar case from California in 2012. Chief Justice John G. Roberts Jr. said then, in a dissenting opinion, that “nothing in the Medicaid Act allows providers or beneficiaries (or anyone else, for that matter) to sue to enforce” the equal-access provision.

Matt D. Salo, the executive director of the National Association of Medicaid Directors, which represents state officials, said his group had not lobbied for an extension of the Medicaid fee increase. “It has rewarded providers who were already doing the right thing, but did not bring in a flood of new providers,” Mr. Salo said.

The higher payments for primary care have been available in the traditional fee-for-service Medicaid program as well as in managed-care plans, which typically pay doctors a fixed amount per patient per month.

Joseph A. Reblando, a spokesman for Medicaid Health Plans of America, a trade group, said, “The fee increase was a good idea in concept, but it was built on an antiquated system in which doctors were paid a separate fee for each service.”